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Dear Friends,
The baby has arrived! My third child was born early this week and mother and baby are doing well. In my dream scenario I would be on true paternity leave at this point, helping to keep my other two children from destroying the house and doing fun dad things. Reality has played out very differently.
The month of June burned through all our stored up cash due to the many marketing changes (or just a slowdown in seasonality, we will never know for sure), and thus my ability to tune out of work is limited. Now, I have a good team and they are able to make many calls on my behalf, but when it comes to being out of money and having to come up with more via loans, or worse having to decide the order of bill payments, that's on me.
There are a lot of avenues that I have been tapping into, and pushing on, but there is a stark reality that is working against me. We don't have any Americano leather in shop and won't get more until the end of the month. That color makes up 60% or more of our daily sales and that number has been the same since the beginning of the company.
So all the good marketing in the world, and all the A/B testing we could try won't really change the fundamental reality that our sales are 40% or less than what they should be. We don't even have enough of our other colors to make up the difference in sales even if we could convince people to buy them at the same rate as our Americano.
So how did we get here? Surely something so critical as maintaining a good stock of our best selling leather would be a priority. After all, this isn't the first time this issue has happened. February of last year had a similar issue where Americano was out for 3 weeks.
After that, we have diligently tried to maintain an entire months worth of extra on the shelf. We had accomplished that until about 2 months ago, when the finances started to get tighter (which is what prompted me to revise our marketing strategy in June) and we didn't have the cash to keep that much leather on the shelf and keep the rest of the operation going. Inventory on the shelf is money on the shelf, but unlike money in the bank, the only way to free it up is to sell it which requires a lot of other things to work properly.
That decision to sell down some of our spare inventory, coupled by lower than usual yields out of the hides and a complete shutdown of the tannery for the first week of July for cleaning, lead us to where we are now.
So what do you do when your sales drop off substantially? Cut costs aggressively. Thankfully there is an obvious place to do that, our marketing budget. Our paid marketing wasn't doing much for us anyways at this point. It's a problem when our marketing heavily features a color that the customer can't get for weeks.
That lowers are daily break even a significant amount, but also requires us to make up that difference in creative ways as much as possible.
So it's time for us to pull something off the shelf that has been in the wings awhile... Our Special Edition Stone Leather.
Early next week (pending no major issues) we will be launching a limited selection of a special edition dark gray color that was originally the next iteration of our Slate, but due to color darkness differences and lack of sales of slate got shelved. We have a small amount of it that is in our new waterproof leather and has been waiting for such a moment as this. Once its gone, we may not get more for a long time (if ever) so don't wait. So keep an eye out for the email announcing that.
We also are working hard to get catalogs mailed out, and see if that can help move the needle. That does cost some money however, so we need to be smart about who we send them to.
Beyond this, and some other minor changes to our website in a hope to improve conversion rates, I am working on consolidating and refinancing our debt. This process should allow for us to expand our access to cash for borrowing. My hope is that we can leverage this cash for a full stocking of our leather (to prevent this from happening again), as well as re-implementing and expanding our marketing efforts.
All of this is happening over the course of a handful of hours that I am working this week and the diligent efforts of my team to support me. Thankfully, I have been able to spend most of my days with the family and hope to keep both of these very important endeavors flourishing long into the future.
For all those who have purchased Americano and are waiting, thank you for your support and patience. Your backorder purchase is a huge help to us and we are pushing to get those backorders to be as short of a wait as possible.
Sorry for the shorter letter this week, but the baby is crying and duty calls.
Stay tuned for more letters on Thursdays in the coming weeks and be sure to go subscribe to our YouTube channel. If you like and watch the videos it helps us get promoted more by the algorithm to people who may never have heard of us.
Ever your servant,
Colin MurdyCEO/Owner
Murdy Creative Co.
Cell: 414-434-9001
MurdyCreative.Co
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